Use the following statistics from Robert Morris Associates' Annual Statement Studies to answer the following question(s).
Net sales 100.0 percent
Cost of sales 59.9 percent
Gross profit 40.1 percent
Operating expenses 31.2 percent
Net profit (before taxes) 8.9 percent
Using Anthony's target income of $23,000, construct a pro forma income statement for Anthony's proposed music shop.
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fiance: male who is engaged to be married
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To construct a pro forma income statement for Anthony's proposed music shop, we would need additional information about the specific costs and expenses involved in running the music shop. The statistics provided from Robert Morris Associates' Annual Statement Studies only include general percentages for net sales, cost of sales, gross profit, operating expenses, and net profit before taxes.
To calculate the specific values for Anthony's target income of $23,000, we need to use the given percentages and reverse engineer the pro forma income statement.
Here's how we can proceed:
1. Calculate the net sales amount:
Since net sales are given as 100.0 percent, we can set it equal to the total revenue of the music shop. Let's assume the net sales amount is 'X'.
Net sales = X
2. Calculate the cost of sales:
The cost of sales is given as 59.9 percent. We can calculate the cost of sales as a percentage of the net sales.
Cost of sales = 59.9/100 * X
3. Calculate the gross profit:
The gross profit is given as 40.1 percent. We can calculate it by subtracting the cost of sales from net sales.
Gross profit = Net sales - Cost of sales = X - (59.9/100 * X)
4. Calculate the operating expenses:
The operating expenses are given as 31.2 percent. We can calculate the operating expenses as a percentage of the net sales.
Operating expenses = 31.2/100 * X
5. Calculate the net profit before taxes:
The net profit before taxes is given as 8.9 percent. We can calculate it by subtracting the operating expenses from the gross profit.
Net profit before taxes = Gross profit - Operating expenses
6. Set up the equation for target income:
Now, we can set up the equation to find the target income of $23,000.
Target income = Net profit before taxes - Taxes
Given that the net profit before taxes is 8.9 percent, we can calculate the taxes as a percentage of the net profit before taxes.
Taxes = (100 - 8.9)/100 * Net profit before taxes
Now, we can substitute the calculated values into the equation to solve for the net sales amount 'X', which will allow us to construct the pro forma income statement.
X - (59.9/100 * X) - (31.2/100 * X) - [(100 - 8.9)/100 * (X - (59.9/100 * X))] = $23,000
Solve this equation to find the value of 'X' (net sales). Use this value to calculate the cost of sales, gross profit, operating expenses, net profit before taxes, and taxes. Then, you can construct the pro forma income statement by listing these values in their respective categories.